What Europe can learn from China’s technological revolution

In January this year, a relatively unknown Chinese startup called DeepSeek sent shockwaves through the world when it announced it had built a new AI model that rivalled US models at a fraction of the cost. Just months later, smartphone manufacturer Xiaomi became one of only four companies worldwide capable of mass-producing three-nanometre chips (the others are the US’s Apple and Qualcomm and Taiwan’s MediaTek). These developments aren’t isolated incidents. They are the culmination of a decade-long experiment in state-directed innovation. 

This rise is intertwined with authoritarian elements, including pervasive digital surveillance, lack of privacy, repression of minorities, and extensive censorship mechanisms. These factors are foundational to China’s technological ecosystem and its global ambitions. Yet despite these flaws, China’s strategies can still offer valuable insights. In this spirit, Binding Hook is publishing a series of articles on the lessons Europe can learn from China. 

The innovation paradox

The conventional Western narrative holds that innovation flourishes in open, unregulated environments where entrepreneurial freedom reigns supreme. Yet China’s successes challenge this orthodoxy. Although market distortions and inefficiencies exist, Leiden University’s Rogier Creemers demonstrates that Beijing’s ‘Made in China 2025’ strategy has delivered remarkable results precisely through state-market coordination, not despite it. The state provides supporting infrastructure – from electric vehicle charging stations to nationwide computing networks – while fostering intense domestic competition that drives innovation. As a result, China now dominates over 80% of the global solar panel market and has become the world’s second-largest semiconductor producer. 

Ecosystem focus

Another example of providing supporting infrastructure and creating ecosystems is China’s chip industry, where the government has focused on building robust supply chain ecosystems rather than isolated products. China tech expert John Lee discusses how Chinese policy focuses not just on production targets but on creating the entire ecosystem that chips need to work – from rare earth materials to specialised software platforms. This holistic approach explains how DeepSeek could develop world-class AI models using less advanced chips: they optimised the entire stack, not just individual components.

Regulate fast

One of the ways China has ensured new fields can thrive is by issuing regulations quickly. It focuses on targeted rules issued by executive agencies like the Cyberspace Administration of China rather than working for years on a single overarching law, says Vincent Brussee, researcher of China’s domestic policy and governance at Leiden University. This regulatory agility lacks democratic oversight – rules can be introduced with little transparency – but it is efficient: since 2021, separate regulations have addressed recommendation algorithms, deepfakes, and generative AI, allowing rapid, flexible responses to emerging risks such as misinformation and politically sensitive content. China’s AI regulations demonstrate that targeted rules can protect consumers while also fostering innovation.

Europe, by contrast, has struggled with its comprehensive but slow-moving approach to technology policy. The AI Act, first proposed in 2021, wasn’t finalised until 2024; the 144-page document took years to negotiate across 27 member states. Meanwhile, Chinese regulators issued targeted AI rules within nine months of ChatGPT’s release, demonstrating what Brussee calls ‘strategic agility’.

Sovereignty through coordination

Lastly, the question arises of how China retains control over new technologies and how that relates to the EU’s balance of building digital sovereignty while keeping pace with technological developments. Ausma Bernot, lecturer in technology and crime at Griffith University, analyses China’s policing technology modernisation to find out how it did things right. 

European law enforcement agencies are heavily dependent on foreign providers like the US’s Clearview AI and Palantir. This dependence creates vulnerabilities to national oversight and data sovereignty. Bernot pinpoints that Beijing has systematically built technological sovereignty through coordinated public-private partnerships. It prioritises state control of platform infrastructure but allows the private sector to build on these state-owned platforms. The result is a technology ecosystem that supports both commercial growth and state autonomy.  

Learning without copying

Recent developments suggest European policymakers are beginning to internalise these lessons. Nine EU member states launched a Semiconductor Coalition in March, recognising the need for a coordinated industrial strategy.

The European Commission’s new plan to boost growth, the Competitiveness Compass, includes provisions for ‘buy-European’ public procurement rules and sector-specific support – departures from traditional EU preferences for horizontal, technology-neutral policies. The EU needs to embrace the idea that different sectors require different approaches, accepting import dependence in some areas while ensuring sovereign control in security-sensitive technologies.

As the geopolitical contest between major powers heats up, Europe cannot afford to fall behind. China has been growing increasingly assertive; it has tightened its technological grip, expanded offensive cyber operations, and aggressively scaled its innovation ecosystem. Meanwhile, the United States has pivoted toward protectionism, strengthening export controls and doubling down on industrial policy to safeguard its tech leadership. Europe must be willing to learn from others to remain a serious contender. But European countries need not – and should not – copy China’s model wholesale. Democratic governance requires different tools and approaches. The lesson isn’t to abandon European values but to recognise that effective innovation policy requires strategic coordination between state and market actors. China’s successes demonstrate that regulation and innovation can be mutually reinforcing when policies are targeted, agile, and aligned with clear strategic objectives.